CANADA FX DEBT-C$ firms to two-week high on broad US$ weakness

Reuters Staff

2 Min Read

* C$ at C$1.0148 vs US$, or 98.54 U.S. cents
* U.S. data backs expectation Fed bond buying to continue
* Bond prices rises across the curve
By Solarina Ho
TORONTO, April 29 (Reuters) - The Canadian dollar touched
its strongest level against the U.S. dollar in two weeks on
Monday as the greenback weakened broadly against most other
currencies following U.S. data that added to expectations the
Federal Reserve will maintain its current pace of stimulative
bond buying.
U.S. data showed consumer spending unexpectedly rose last
month as the benign inflation helped household spending power.
The price index for consumer spending dipped 0.1 percent. The
lack of inflation pressure gives the U.S. central bank scope to
maintain its very easy monetary policy stance.
"It's really just broadbased U.S. dollar weakness. We're
seeing almost every currency has gained ground against the U.S.
dollar leading into the North American open," said Camilla
Sutton, chief currency strategist at Scotiabank.
"Some of that has to do with shifting expectations for how
long the Fed will continue its pace of bond buying."
At 9:22 a.m. (1322 GMT), the Canadian dollar was
trading at C$1.0148 against the greenback, or 98.54 U.S. cents.
This was stronger than Friday's North American session finish at
C$1.0169, or 98.34 U.S. cents.
Canada's dollar extended Friday's gains after U.S. GDP
figures last week showed economic growth sped up in the first
quarter, but not as much as expected.
Despite the Canadian dollar's strength, it was broadly
underperforming most other currencies. Against the U.S. dollar,
it was expected to trade between C$1.0170 to C$1.0100 for the
session, according to Sutton.
The price of Canadian government debt rose across the curve,
with the two-year bond up half a Canadian cent to
yield 0.932 percent, while the benchmark 10-year bond
rose 9 Canadian cents to yield 1.696 percent.